A Problem That the Fed Faces When It Attempts to Control

question 82

Multiple Choice

A problem that the Fed faces when it attempts to control the money supply is that

• A)the 100-percent-reserve banking system in the U.S.makes it difficult for the Fed to carry out its monetary policy.
• B)the Fed has to get the approval of the U.S.Treasury Department whenever it uses any of its monetary policy tools.
• C)the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount.
• D)the Fed does not control the amount of money that households choose to hold as deposits in banks.

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Definitions:

Permissive

Permissive describes an attitude, approach, or parenting style characterized by granting freedom and not imposing strict rules or expectations.

Effective Punishment

Disciplinary measures that lead to a decrease in the undesirable behaviors, emphasizing correction rather than retaliation.

Denial of Privileges

A disciplinary technique that involves withholding certain privileges or enjoyable activities as a consequence for undesirable behavior.

Power Assertive

A discipline strategy that involves the use of power or authority to enforce rules and manage behavior, often without physical aggression.